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NSE Intra-day chart (12 October 2022)
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Market Commentary 13 October 2022
Benchmarks likely to open in red on weak global cues

 

Indian equity benchmarks halted a three-day losing streak on Wednesday and ended with gains of around a percent amid broad-based gains, shrugging off nervousness across global markets. After making flat-to-positive start, key gauges gained traction as traders took some support after Finance Minister Nirmala Sitharaman exuded confidence on India's relative and absolute growth performance in the rest of the decade and forecast the country's growth rate to be around 7% this financial year. Sentiments remained positive as Krishnamurthy Subramanian, Executive Director (India) - International Monetary Fund Designate, said India has emerged as a positive spot in the world economy, due to the well-designed policy responses that were implemented during the COVID crisis. However, key indices erased all the gains to trade flat in late morning deals, as traders turned cautious with the International Monetary Fund (IMF) in its annual World Economic Outlook report stating that outlook for India is growth of 6.8 per cent in 2022 - a 0.6 percentage point downgrade since the July forecast, reflecting a weaker-than-expected outturn in the second quarter and more subdued external demand. But, markets regained traction in late afternoon session to settle near day's high point. Traders took note of S&P Global Ratings' statement that India is facing various factors that may shake its sovereign credit metrics but strong economic growth rate and external balance sheet are expected to neutralize the risks inherent in the global environment. S&P has the lowest investment grade rating of BBB- on India with a stable outlook. Some support also came as the Reserve Bank of India (RBI) has raised the minimum capital requirement for setting up an asset reconstruction company (ARC) to Rs 300 crore from the existing Rs 100 crore in order to strengthen the securitisation sector which plays a vital role in the management of distressed financial assets. Finally, the BSE Sensex rose 478.59 points or 0.84% to 57,625.91 and the CNX Nifty was up by 140.05 points or 0.82% to 17,123.60.

 

The US markets ended marginally lower on Wednesday as investors looked ahead to a key consumer report that will inform the pace of the Federal Reserve's rate hikes going forward. Meanwhile, the minutes from the Fed meeting showed policymakers pushed back on the idea of a pivot, choosing to give priority to their commitment to take inflation. The minutes showed that the policymakers felt slowing the pace of tightening would be appropriate while assessing the effects of cumulative policy adjustments on growth and inflation. The members lowered their projections for the economy and expect GDP to grow at just a 0.2 percent annualized pace in 2022 and just 1.2 percent in 2023, well below trend and big drop from 2021, which saw the strongest gains since 1984. The summary of economic projections at the meeting pointed to a terminal rate, or end point of rate increases to be around 4.6 percent. Stock specific developments, Walgreens Boots Alliance, Walmart, Verizon, Cisco Systems, Merck, Boeing and Honeywell International ended weak. However, Shares of PepsiCo rallied 4.2 percent after the company raised its annual guidance and reported stronger-than-expected quarterly earnings. Shares of Moderna Inc. climbed more than 8 percent. The company announced that it would team up with Merck to develop and sell a cancer drug. JP Morgain gained about 1.7 percent. Coca-Cola, Intel and Nike gained 1 to 1.25 percent.

 

Crude oil futures ended lower on Wednesday, magnifying their previous sessions' losses, amid concerns about outlook for demand due to slowing global growth. The Organization of the Petroleum Exporting Countries (OPEC) cut its outlook for demand growth this year by between 460,000 bpd and 2.64 million barrels per day, citing the resurgence of China's COVID-19 containment measures and high inflation. OPEC said the world economy has entered into a time of heightened uncertainty and rising challenges. Benchmark crude oil futures for November delivery fell $2.02 or 2.26 percent at $87.33 a barrel on the New York Mercantile Exchange. Brent crude for December delivery dropped $1.62 or about 1.7 percent to settle at $92.67 (Provisional) a barrel on London's Intercontinental Exchange.

 

Indian rupee tumbled against dollar on Wednesday, on account of sustained dollar demand from importers and banks. Investors maintained cautious approach after the International Monetary Fund (IMF) in its annual World Economic Outlook report has cut its projection of India's economic growth in 2022 to 6.8 per cent - a 0.6 percentage point downgrade since the July forecast, reflecting a weaker-than-expected outturn in the second quarter and more subdued external demand. On the global front, British pound rebounded off a two-week low on Wednesday as investors cast doubt on the Bank of England's commitment to ending emergency bond buys as scheduled, amid reports signalling the BoE could extend purchases should market conditions warrant. Finally, the rupee ended at 82.33 (Provisional), weaker by 12 paisa from its previous close of 82.21 on Tuesday.

 

The FIIs as per Wednesday's data were net sellers in equity segment and net buyers in debt segment. In equity segment, the gross buying was of Rs 19229.37 crore against gross selling of Rs 22990.54 crore, while in the debt segment, the gross purchase was of Rs 1632.90 crore against gross selling of Rs 1129.01 crore. Besides, in the hybrid segment, the gross buying was of Rs 15.31 crore against gross selling of Rs 30.55 crore.

 

The US markets ended lower on Wednesday after minutes from the last Federal Reserve meeting showed policymakers agreed they needed to maintain a more restrictive policy stance. Asian markets are trading mostly in red on Thursday as investors await inflation data from the U.S. due later stateside. Indian markets rebounded and ended higher on Wednesday as value buying in energy, banking, IT, and FMCG shares helped the Indian indices cut short a three-day losing run. Today, markets are likely to start session in red tracking lackluster trade in global peers. Weak set of macro-economic data likely to dampen sentiments in domestic markets. India's retail inflation spiked to 7.41 per cent in September, mainly due to costlier food items. For the ninth month in a row, retail inflation has remained above the Reserve Bank of India's tolerance level of 6 per cent. Also, India's industrial growth, as per the Index of Industrial Production (IIP), slid to an 18-month low of -0.8 percent in August from 2.2 percent in July. Traders will be concerned as rating agency Crisil's research wing said India Inc is expected to report a three per cent year-on-year decline in profits for the July-September period. It added that this fall in profitability will be the fourth straight quarter of the decline in profits for the listed companies. Also, foreign institutional investors (FIIs) net sold shares worth Rs 542.36 crore on October 12, as per provisional data available on the NSE. However, some respite may come later in the day as industry chamber PHDCCI said going by the current trend, it is expecting the Indian economy to grow at 6-7 per cent during current fiscal year. Chamber's new president Saket Dalmia said production has bounced back and there is a big demand in the country. Traders may take note of the International Monetary Fund (IMF) report stating that India's combined fiscal deficit (Centre + states) is likely to return to the pre-pandemic level (FY20) of 7.5 per cent of gross domestic product (GDP) only by FY27. Some support may also come with a private report stating that a combination of factors like wider opening, improving labour market and terms of trade for the rural sector will result in rural demand to rebound in India. There will be some buzz in coal industry stocks as Union Minister Pralhad Joshi said Coal India, accounts for over 80 per cent of the domestic coal output, will achieve 1 billion tonne coal production target by 2025-26 as against the earlier timeline of 2023-24 in view of the COVID-19 pandemic. Sugar industry stocks will be in focus the Directorate General of Foreign Trade (DGFT) said the validity for export of raw sugar to the US under Tariff-Rate Quota (TRQ) has been extended from September 30, 2022 to December 31, 2022. There will be some reaction in banking stocks as Moody's Investors Service said the Reserve Bank of India's slew of rate hikes this year to combat surging inflation will help lift banks' net interest margins, but the increase will be limited as funding costs will rise faster than loan rates. IT stocks will continue to hog limelight as they report their second quarter earnings of FY23. Infosys and Mindtree are likely to deliver their Q2FY23 performance on later in the day.

 

Support and Resistance: NSE (Nifty) and BSE (Sensex)

 

Index

Previous close

Support

Resistance

NSE Nifty

17,123.60

17,008.31

17,190.61

BSE Sensex

57,625.91

57,245.34

57,847.06

 

Nifty Top volumes

 

Stock

Volume

Previous close (Rs)

Support  (Rs)

Resistance (Rs)

(in Lacs)

Tata Steel

413.57

100.65

99.36

101.56

Power Grid Corporation of India

264.66

215.60

211.31

217.91

Axis Bank

212.28

807.80

790.56

817.91

ICICI Bank

145.57

867.85

862.34

872.54

Tata Motors

142.87

396.75

392.50

399.60

 

  • Tata Motors' all new Tiago.ev has received an electrifying response from the market and has surged past the 10,000 booking mark on first day. 
  • Bajaj Finance is extending a list of lucrative benefits to its customers during the Amazon Great Indian Festival, which started from September 23, 2022. 
  • M&M and Jio-bp have entered into agreement for setting up charging network for the upcoming electric SUVs of the company.
  • Adani Enterprises' unit -- Adani Data Networks has been granted unified licence for access services, which enables it to provide all telecom services in the country.
News Analysis